The Coast Reporter’s January 24, 2014 Real Estate Weekly included an extra Kenan MacKenzie “Real Estate Reflections” and I’ve decided it should kick off this new thread. It is quoted in its entirety and I’ve followed with a few reflections of my own.

Quote:Optimism abounds for 2014

I write my opinions a fair bit in the column so I thought to start the year off I would ask some of my Real Estate colleagues what they thought 2014 would bring.

John: “very optimistic, 2013 ended well and January has been the busiest in years, first resale in Watermark sold in 57 days for approx. $730 a square foot“

Terry: “pretty similar to 2013 but showing a strong start with lower price range on the move”

Ali G: “huge difference over last year phones have been busy”

Kate: ”pent up demand was showing on Boxing Day”

Craig: “more of 2013, buyer’s market great time to buy”

Ali K: “sales activity was building in December and has continued into January”

Susanne: “getting calls from back east, and retirees are more serious”

Rhonda: “more urgency”

Tracey: “buyers have discovered deals on the coast and the investing in the US seems to have ended with investors moving their money back home”

I myself believe the market has shifted but I want to caution sellers, it does not mean that prices are on the move. It took a year or more in the previous cycles to see a price shift. First we have to work thru the excess inventory before demand will push price.

All the right ingredients are in place for a strong 2014. Mortgage rates will stay at record lows or even push lower. Garry Marr for the Financial Posts writes ”Falling bonds yields could push mortgage rates lower in coming weeks as banks compete in the spring housing markets, traditionally the strongest real estate period of the year” Sechelt should see the start of some large construction projects over the year, which will bring some badly needed jobs to the coast. Baby Boomers are retiring and what better place than our little paradise on the Sunshine Coast. The Sunshine Coast has some great buying opportunity for someone looking for a great deal, history shows us that it will not last and the Seller will be in the driver’s seat.

Yes, as the BC Oracle would say, “Wow.”

What do I say? “Wow, talk about living in a bubble and I don’t mean real estate.” This would be all fine and dandy if the SC was cut off from the rest of the world and therefore not subject to any external economic forces. In my opinion, the only agents showing with some grasp on realty are Terry: “pretty similar to 2013 but showing a strong start with lower price range on the move” and Craig: “more of 2013, buyer’s market." Yep, more of 2013 as prices continue to drop.

John, the agent whose handling Watermark got all excited with the Watermark’s first flip and it was a whopper. So, what happened afterwards? Well, the other owners trying to flip jacked their prices and they’re still sitting there unsold. As well, the developer jacked up prices on some of the units and those ones haven’t moved either. There have been three further unit sales in January but not at $730/sf and not at those jacked up prices.

Gail says “best January in 6 years”. Well, that is likely so if you are looking at “all types” because it’s been the best January for townhouse/condo sales since 2008. If all January’s detached sales go through there will be 28 (Median price: $366,500) which betters January 2010 sales of 27 (Median price: $459,900); so, volume up, value down. Yippee!

So, lots of cheering over December and January sales. Unfortunately, February looks like is going to suck.

What they are describing is not a bottom.
A bottom is when the For Sale sign goes up...
Then when it becomes a stationary object of the landscape gets tagged with spray paint.
Then you use that metric to check who is holding the title...Wait...
You wait until the posts rot off and the sign falls into the weeds.
Then you go lowball offer the Bank or municipal office that is holding the title.
You keep lowballing insulting offers until they get disgusted enough to take it.
The time to buy Real Estate is when EVERY one of your friends thinks you are crazy to ever invest in RE.
It is when a viable farm/acreage is the same price as a spec house in town.
It is when the mortgage is less than rent and cash offers work.
THAT is a bottom. The rest is time to do your homework.
In the meantime... exit the market.

I began this thread (post #1) with an quoted article that showed a number of local Realtors were feeling very optimistic in early January that the market could finally be showing signs of turning around. This optimism was based on office activity up to mid-January and on the preceding month’s sales.

So, did January sales back up Realtor optimism? They sure did as the ‘SC January Sale YOY’ table below shows. Total sales (all types) up +55% over January 2013 with single detached home sales up +35% versus the year before.

Now, what did I say at the end of my first post above? “Unfortunately, February looks like is going to suck” - well, it did. On a month-to-month basis, total February sales declined -18% from January and detached sales dropped -30%. On a year-over-year basis, February’s detached sales declined for the third straight year since 2011.

Since October, it has been attached sales that have helped pump up the stats and townhomes in particular. Remember, their sales have been languishing for the last couple of years and with so many resales on the market prices have been dropping steadily. (Check out the listing situation this past November in Gibsons by scrolling to the bottom of this first ‘Soames Place’ post. Brutal. By the way, nothing has moved at Soames Place or the other new Gibsons condo proposal - Blue Heron Village. Why pay their condo prices when nearby you can pick up a 1520sf, 3bd/2ba resale townhome for $289,500?)

So, what pumped up December’s and January’s sales? Don’t know. What happened in February? Well, buyers could have had a few distractions such as the lousy weather or staying indoors to watch the Olympics because of that lousy weather. So, we’ll have to see how March plays out.

The next two tables break down January/February sales by area for 2014 compared to 2013 and are followed by the year-to-date tables. Next are the January/February single detached home (SDH) sales by area on a year-over-year basis followed by the year-to-date (Jan & Feb) versus year-over-year single detached home sales (SDH) table. The 2014 total year-to-date SDH sales are even with 2013 (47 sales), but since Jan/Feb 2013 sales were so poor this is nothing to cheer about. Again, we will want to watch what happens this month (March) as the spring selling season begins.

As I’ve mentioned before, I pull this monthly sales data from SC Realtor Gary Little’s great website. For 2014, he made some substantial changes to his Stats page. For one thing, he no longer reports the Average Selling Price. Some may miss that data, but not me. As I mentioned many times in the past, the ASP data for single detached home sales on the Sunshine Coast was distorted by the inclusion of homes sales valued at $1 million and over which would pump up the ASP by a 100-thousand and more depending on how many million dollar plus homes sold in the month.

Little is now going solely with the ‘Median Sales Price’ which knocks off the very high and very low sale prices, so the result is much more realistic to what is occurring in the market. So, the table and chart below shows the SDH Median Sales Price by month for 2011-2014.

After I entered February's price, I looked at the chart and thought despite the wild swings the overall momentum seems downward. To verify this, I decided to add a trendline and it bears this out. According to the trendline, the SDH ‘Median Sale Price’ has slowly dropped roughly $35,000 in value over the last three years. The drop may seem insignificant, but I think it reinforces other data showing declining property values on the Sunshine Coast (Property Assessments, Benchmark Prices).

In the last half of 2013, I began to take a closer look at the REBGV Sunshine Coast ‘Sales by Price Range’ table that is released every month. I used that info in a November 29th post (scroll down) to query whether a new subdivision in Sechelt (Silverstone Heights) would have much luck moving its 30 homes (not built but all listed on MLS) valued between $479,900 and $579,900. I also created a Pie Chart with the full year’s data and added it to my 2013 year end summary thread, ‘Sunshine Coast, BC: 2013 Real Estate Sales - The Big Picture’.

The table below shows January’s Sales by Price Range illustrating that the trend is continuing - few buyers are interested in homes priced $400,000 and over.

Now, what happened on the last day of February? Can you remember? Kudos to those who know the answer: CMHC raised its default insurance premiums for the first time since 1998. While that got lots of press, what didn’t get mentioned by most of the main stream media was private insurer, Genworth, followed suit the very same day - in fact, the company has wanted to up those rates for a long time but felt hamstrung by the publically-owned CMHC. So, this is another issue that will impact those SC listed homes valued above $400,000. Oh, dear, what is going to happen at Silverstone Heights?

Did February’s detached sales follow January’s pattern? Oh, you bet and here is how those 19 sales broke down:

6 sales between $200,000 - $299,000

7 sales between $300,000 - $399,000

6 sales between $400,000 - $699,000

So, for all those with homes listed above $400,000 and who are desperate to sell keep dropping those prices!

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The HPI and Benchmark Price moved up ever so slightly by 0.2 and $500. In January, the Benchmark was -26.7% off the July 2010 Peak and in February it rose by 0.1% to -26.6%. From October 2013 to now, it looks like both the HPI and Benchmark are flatlining. This is mirroring what occurred to both between May and October, 2012.

It was in June 2012 that the feds announced those first significant changes to CMHC (amortization dropped to 25 years from 30, refinancing limit dropped to 80% from 85%, insurance limited to homes under $1 million, buyers of homes priced higher than $1 million must have 20% down - at least $200,000). Last summer, the first increase in mortgage rates occurred and we had a spurt in buying from late summer into fall.

Obviously, the type, value and location of homes sold would have an impact, too. If not many homes above $400,000 are moving then neither will that benchmark price.

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As I mentioned above SC Realtor Gary Little dropped 'Average Sale Prices' from his stats page. He has also added new features that are interesting to play with - 'Moving Averages' tables for:

Median Sales Price

Median Days on Market

Median Discount from Original Price

Sales:New Listing Ratio

With each table, you can choose property type and duration (3-month, 6-month, 9-month, 12-month). I know that with stock trading a lot of value is placed on moving averages especially in the short term to determine trends; however, I am not sure how valuable such info is in a real estate market the size of the Sunshine Coast.

**Also a note about Little’s February data - his Gibson’s data is wrong. There were 5 detached homes sales and 7 attached sales and not the 6 and 6 he has indicated. Therefore, this lowers total detached sales to 19 and increases attached sales to 12.

This post will conclude the sales stats for January and February. The tables below are the Residential Sales by Price Range for single detached, attached (townhouse/duplex), and apartment (condo). The left side of the table shows the month’s sales and the right side is the year-to-date totals. There were no sales beyond the $1,000,000 - $1,099,999 range. The small table shows single detached sales only for February with the year-to-date total. The Pie Chart shows that single detached year-to-date total (Jan + Feb) which shows that two-thirds of detached sales occurred below $400,000. (Note: the Pie Chart data moves clockwise from the top)

Next are the REBGV Sunshine Coast February sales charts.

I mentioned in my first post in the ‘2014 Sunshine Coast Active Listings’ thread that on February 24th total single detached active listings were at the same level as April 9, 2013. So, it appears that more homes are coming on the market earlier this year than last year. So, I decided to plot the monthly new detached listings found in the REBGV stats package. I created tables with some of the other data. I plan to explore the detached sales-to-listings ratio further in a thread of its own.

So, again, the chart is new detached listings per month only and not total active listings.

I’ve decided to add one more chart to the Jan/Feb Sales Stats post. I’m in the process of taking my first serious look at the REBGV’s ‘Sales-to-Listings’ Ratio for single detached homes on the Sunshine Coast.

According to the REBGV:

Quote:A buyer’s market is when there are many more homes for sale than there are buyers. As a result, prices may drop over time as home owners become eager to sell their property.

A seller’s market is when interest rates are low so there are many qualified buyers and not many homes for sale. Buyers must make quick decisions and face multiple offers on the home they have chosen to buy and prices can rise.

To measure market activity, the Real Estate Board has a unique tool. It’s our Sales-to-Listings ratio which measures the balance between demand and supply.

a ratio of three sales for five listings means we are in a seller's market (also known as a ratio of 55 – 60%).

a ratio of less than 7 sales for every 20 listings means we are in a buyer’s market (also known as a ratio of less than 35%).

So, I’ve created this chart below using the detached ‘Sales-to-Listing’ Ratio back to 2010 to get a good sense of current market direction. The ‘Ratio’ is calculated each month by dividing the month's detached sales by the month's new detached listings.

I was so intrigued by the results shown in this chart that I have decided to go back much, much further - to 2002. I am just putting that data together now and my first ‘test-drive’ chart is an eye-opener. When I have it refined, I will put upload this historical information in a new thread. Stay tuned.

(Note: Comparing this chart with the 'SC New Detached Listings/Mth' chart directly above (scroll up) will help illustrate why the Sales-to-Listing ratio is falling)

It's that time of the month. Put another log on the fire; pour yourself a scotch (it's a wee dram of Drambouie, for me); put on some soft, jazzy music - maybe Michael Bublé; turn down the lights; pull up the wing back chair; take a deep breath in and out; and try, try to relax because it's 'Real Estate Reflections' with Sunshine Coast real estate agent Kenan MacKenzie - hot off the press in today's Coast Reporter Real Estate Weekly.

Quote:Sunshine Coast Detached Listings
There are 614 current detached listings up from January’s 565. Detached sales ending February 28, 2014 totalled 37, in 2012 there were 50 sales and in 2011 there were 69 sales for the same time period. The current market’s hot price range is below $400,000, with 26 sales occurring in this price range. With the current pace of sales this represents a 33-month supply of listings.

Sunshine Coast Attached Listings
There are 152 current attached listings. Attached sales ending February 28, 2014 totalled 16, in 2013 there were 11 sales and in 2012 there were 15 sales for the same time period. With the current pace of sales this represents a 19-month supply of listings. Attached listings represent strata unit apartments, condos and townhouses. Attached sales are up slightly over the previous year.

(Skook note: 19 months = 1year, 7 months)

Sunshine Coast Land Listings
There are 365 bare land listings. Land sales ending February 28, 2014 totalled six sales, in 2013 there were nine sales and in 2012 there were eight sales. With the current pace of sales this represents a 121-month supply.

The stats below are for detached sales only and for the entire Sunshine Coast for the month of January:

$000 to $300,000 with 14 sales

$301,000 to $400,000 with 12 sales

$401,000 to $500,000 with five sales

$501,000 to $600,000 with three sales

$601,000 to $700,000 with two sales

$701,000 to $ 800,000 with zero sales

$801,000 to $900,000 with zero sales

$901,000 to $1,000,000 with one sale

Zero sales over $1,001,000 this month

(Skook note: some of those price range totals don't make sense. It looks likes some totals are from January and some from February. See the REBGV stats tables in post above. How's your scotch?)

February was definitely a lack lustre month, I think with the Olympics on and the weather buyers decided to stay out of the market. The feedback I am getting from the agents is they are working with more buyers than the last few years. This will turn into sales so sellers do not despair and buyers take advantage while you can. The listing price is still your best marketing tool, keep it sharp.

(Skook note: I think Kenan's been reading my posts; you know Olympics and weather. More buyers...yeah, all wanting lower prices, so seller despair quotient is up. Don't worry buyers, no rush, there will be lots of houses to go around for years to come. Keep your listing price sharp?? How about keep your pencil sharp and an eraser handy as you keep dropping those house prices. Damn, I need a scotch with my dram.)

The Sunshine Coast has some great buying opportunity for someone looking for a great deal, history shows us that it will not last and the seller will be in the driver’s seat soon.

(Skook note: are you into the scotch, too, Kenan? Seller in the driver's seat soon? Oy, vey...pass me the bottle who needs a glass.)

Here's a market update for you. From Saturday, March 1st until Thursday, March 6th, there were six sales.

Advil! Advil! Where’d I put that damn bottle of Advil!
Skook:
Once you and your devoted readers awaken from your binge while reading (writing) this post, you’ll likely need a bit of the hair of the dog. Fortunately for you, I have just the remedy, carefully compounded in the RFM research laboratory! It’s the Pricing Property in a Declining Market thread, which I have just re-posted in case anyone is listening/watching/reading the tea leaves about the likely course of the real-estate market for the next couple years.
Your servant
RFM

You see, if you check his Facebook page, he gives notice of those sales on March 23rd. I took that date at face value as in "Look what I just sold now!" But, I guess I should never have assumed that was the case. Silly me. I checked it with March's sales up to the 20th, but didn't go back any further - I didn't think that would be necessary. If I had gone back further, I would have found this...

711 Tricklebrook Way, Gibsons - sold on January 31st
976 Vernon Place , Gibsons - sold on January 30.

I guess Kenan never got around to making his Facebook announcements at the time of the sales. Or, does he only post his sales when they actually close? Well, that could be. However, the REBGV doesn’t wait for closing when it comes to monthly stats and those properties would have been tallied in January.

And, what about his FB post about selling 9314 Truman - is it possible that it took 8 months to close? You see according to the MLS sales data, that property sold on August 2, 2013 for $460,000 and on that date the MLS # was 984824 and not # 692590 as Kenan's FB post and his website indicate.

You know what? I think I should stay away from his Facebook page. It's just too confusing and real estate is confusing enough as it is. Aw, Kenan, you're driving me to drink. Now where did I hide that new bottle of Drambuie - was it the toilet tank? I like it chilled. That was my Irish Nan's favourite hiding place for her bottles of IPA - but all the grandkids knew about it.